India’s stimulus plan: Good enough for economy revival?

India’s stimulus plan of Rs 20 lakh crore to revive the battered Indian economy amid Covid-19 hasn’t been able to stop sharp fall of stocks or common people’s concern over job crisis and economic stability.

As banks stocks continue to bungle, the worry grows that lenders might have to bear the brunt of the situation without sensible economic reforms.

All that glitters…

India is abuzz with the Rs 20L crore stimulus plan that FM Nirmala Sitharaman declared in five tranches till Monday. But is it enough to dissolve the panic over life and livelihood among people? According to experts, the plan was more like a second budget plan with some relief and structural reform announcements. So far, the apparently huge money plan doesn’t seem to have much promise for the mass.

With investors expressing displeasure over India’s Rs 20L crore stimulus plan, benchmark indices fell over 3 per cent on Monday. The picture was equally bleak in the banking sector gauge that dropped by around 7 per cent. The Opposition leaders have been rooting for providing cash to the mass. They are also criticizing the Centre over “poor handling of migrant labourers’ issue”.

Several veteran politicians raised questions over the Centre’s authenticity in being transparent about package details. The CPM Politburo member asked, “Why is the government being so coy about giving the figures? In fact, it has refused to do so,” in her opinion piece in NDTV.

Now let’s look at the major shortfalls of India’s Rs 20L crore stimulus plan that experts have highlighted

The Centre’s collateral-free loans for MSME will never ensure pay back by borrowers. And this will discourage banks to lend them money in future. Now, this is simple, would you lend anybody anything if they never return that to you? No!

The government hasn’t talked about giving out cash in the hands of the poor, an advice that economists suggested. Since a nation’s economy is run by its poor and middle-class people, giving cash incentives to farmers, migrants, small traders was a must. But we didn’t see this in any of the economic reforms so far.

Experts pointed out that the Rs 20 lakh crore package failed to address the states’ issues. The state governments are the frontline fighters in the Covid-19 crisis. The Centre did not commit anything over GST compensation owed to the states.

Who’s the real enemy, virus or money crunch?

There is no doubt that in order to curb the virus spread, the country has come to the brink of total economic breakdown. Students, away from schools and colleges, resort to virtual learning. But educationists worry that this cannot be the permanent solution. Professionals are facing lay offs, pay cuts and instability in their career.

To sum it up, a poor country like India cannot afford to stay in lockdown for months without any economic reforms. Now the entire nation is waiting for the Centre’s move towards restarting the economy from next month. Otherwise, there’s no silver lining ahead. It’s either corona or money crunch, we’re battered anyway!

Along with the rest of the world, India has been fighting the battle against coronavirus for almost three months now. Each of the 29 states 7 Union Territories of the country have been formulating their own strategies to fight the unprecedented battle with the Centre’s help and support.